Conservative manifesto pledge: Allow employers to use their levy to pay apprentices’ wages

Martin Doel argues AGAINST

The apprenticeship levy is a bold policy that surprised many when it was announced, but it is of a piece with much of the last government’s thinking in terms of what is now being called Red-Toryism; it involves a more interventionist and less purely market-driven approach. In its application of what is effectively a hypothecated tax, it could be a game changer in ensuring employers commit to developing the skills of their workforce to increase productivity, national prosperity and promote individual careers.

To be this game changer, however, levy policy needs to be stable and subject to only incremental, well-considered change, rather than spasmodic development based on self-interested lobbying.

READ MORE: Why the pledge is a GOOD idea

The most oft-stated concern of both employers and further education providers is the frequency of change in our technical and professional education system. It was therefore surprising to see in the Conservative manifesto, under a section headed ‘Career Learning,’ a proposal that companies be able to access the apprenticeship levy to support wage costs during a period of career training (the nature of this training is not specified).  This, when the levy has barely been introduced and its impact has certainly not been assessed, either in output terms, or in terms of the amount of income generated.

A separate, but related, concern is in relation to the potential for ‘gaming’ – a phenomenon that has sadly afflicted a series of skills initiatives, including but not limited to individual learning accounts, train to gain and the early stages of the apprenticeship ‘renaissance’. If the levy is related to a specific and clearly defined apprenticeship product, its application and impact will more easily be ensured and assessed. The wider the product book, the wider the potential for its abuse or misuse; to prevent such abuse or misuse, would be an overweening bureaucracy, again following a pattern that has become wearingly familiar in skills reform. Already we have seen the potential for gaming around the Register of Apprenticeship Training Providers.

If the uses of the levy are to be expanded, it would be best for this to be in relation to training costs in a family of apprenticeship products that can be more easily monitored at the outset.  Work placements and/or traineeships in the college-based route might be candidates for this broadening, providing a useful incentive for employers to become fully involved and committed to the development of young people and prospective apprentice/employees. Tracking and accounting for subsidised wage costs would be much more difficult to achieve, particularly with a new and untested apprenticeship levy IT system.

No one can know how much might be available until the levy has operated for at least a year

A further additional candidate for liberalisation of the levy, which is mentioned in the manifesto, is for large employers to pass on their levy vouchers to smaller employers in the supply chain. Sensibly, at the launch of the levy this has not been allowed, but it has been well signposted as a future development.

Involving smaller employers in this way also avoids one of the other pitfalls of the proposal to cover wage costs in other training programmes. Namely, losing the prospect of using underspent levy funds to underwrite apprenticeship training costs for smaller employers who do not pay the levy.

Though there are estimates of how much underspend may be generated, no one can know how much might be available until the levy has operated for at least a year. This uncertainty provides a clue as to why a (small c) conservative line has been taken in the allocation of apprenticeship funding for non-levy payers. Without the apprenticeship levy underspend by large employers, government will need to fund this directly, or accept that apprenticeship growth will slow and be concentrated in large employers.

We have a once-in-a-generation opportunity to develop a world class technical and professional education system, with high-quality apprenticeships at its heart. Realising this potential will depend on implementing policy in a considered, evidence-based and focused way, not veering one way and another even before we understand the consequences of policy changes already underway.

 

Martin Doel is FETL Professor of Leadership in Further Education and Skills at UCL



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3 Comments

  1. Well said, Martin. Two comments:

    1 Apprenticeships are jobs, and holding fast to that central fact is crucial I believe to their effectiveness. The more that they look like a Government programme, the less effective they will be. I think the Conservative Party’s proposal is fundamentally ill-conceived.

    2 On the possibility of broadening the range of training which employers can spend the Levy on, colleagues in England may not know that the Scottish Government has decided to do exactly that, as it is entitled to do. I know Governments in England are loathe to peer over the Border, but this is a golden opportunity to compare and contrast. Just the sort of thing a Professor might like to look into, Martin?

  2. Ian, Thanks. As I say in the piece, I do think that the levy could usefully be extended over time to cover other training products but only when we have learned the lessons from its initial introduction. The over extension of policy has been a recurring problem in skills funding, resulting in a counter reaction of heavy bureaucratic controls when policy is then abused by sharp or illegal practice. Scale is material here. With much smaller no oversight in Scotland is more easily achieved, meaning that they can experiment more readily. That is why we should learn from their successes and mistakes. A forthcoming study with colleagues at the Post-14 Centre UCL IOE, funded by Edge and others, will be looking comparatively at skills systems in each of our 4 nations.

  3. Jack Graham

    The key issue is apprenticeships should be about growing new talent into the business and not a way to increase numbers by converting existing employees into apprentices to draw down money.

    With regard to Ian’s comment regarding Scotland I would wait and see first as £10m is not a lot of money and is to be managed not by the skills agency but by the FE sector.